2025 TAX UPDATES YOU SHOULD KNOW

Dear Client,                         December 2025

Thank you for your continued business in 2025. Below please find some information for your review and consideration.

CRA Notices – Changes from paper to online mail

• Effective September 5, 2025, personal tax clients registered for CRA’s My Account automatically started receiving CRA notices online. Personal tax clients also receive an email notification every time new mail is available in My Account. If you prefer to receive your CRA notices by paper mail, you can change your correspondence preference in My Account. The email notification is only available to personal tax clients.
  

• Business clients who are registered for My Business Account, or who have given me online authorization through Represent a Client, stopped receiving CRA notices by paper mail in the spring of 2025 and are now receiving their notices online through My Business Account.  These clients can change their correspondence preference in My Business Account. Note, business clients receiving online notices do not receive an email prompt that a notice is available in My Business Account.

Federal Budget Highlights

Business Tax

1. Deductions grouped as Productivity Super-Deductions allow businesses to write off a larger share of the cost of certain investments right away. These include:
   

• 100% first year write-off of productivity-enhancing assets, including patents, data network infrastructure, and computers.
  

• 100% first year write-off of clean energy and energy conservation equipment, and zero-emission vehicles. 
  

• 100% first year write-off of the cost of manufacturing or processing machinery and equipment, including the cost of buildings or factories that are acquired before 2030. This is a significant benefit as these buildings were previously written off at a rate of only 10% per year. A minimum of 90% floor space must be used for the factory’s manufacturing and processing. 
  

2. The Underused Housing Tax launched in 2022 has now been eliminated. It required Canadians who owned residential properties through corporations, partnerships and trusts to file a special return to determine tax eligibility. Failure to file the special return would have resulted in onerous fines.

Personal Tax

• The Carney government cancelled the increase to capital gains taxes proposed by the Trudeau government. Capital gains occur from sales of investments such as stocks, bonds, rental properties and cottages. The capital gains tax has reverted to 50%.
  

• Personal taxes on the first $57,325 of income (first income tax bracket) have been reduced from 15% to 14.5% starting in the 2025 taxation year, and to 14% for 2026 and subsequent taxation years.
  

• The GST/HST for first-time homebuyers on new homes costing up to $1 million has been eliminated. It is reduced for new homes that cost between $1 million and $1.5 million.
  

• Eligible personal support workers will get a 5% tax refund on their annual earnings up to $22,000 which equates to a maximum refund of $1,100. The refund will apply to the 2026 taxation year and end in the 2030 taxation year. Eligibility is based on one-on-one care of patients at regulated health care establishments. 
  

• Home renovation expenses up to $20,000 to improve the safety and accessibility of seniors 65 years of age or older can be currently claimed twice on their tax returns, once as a Home Renovation Credit and again as a Medical Expense Credit. However, starting in the 2026 taxation year, home renovation expenses can only be claimed once. 
  

• The luxury tax that began in 2022 on aircraft costing $100,000 or more, and boats costing over $250,000 ceased after Budget Day (November 5, 2025). However, the luxury tax on cars costing $100,000 or more is still in effect. This tax is the lesser of 10% of the price of the car or 20% of the price above $100,000. If a car costs $150,000, the luxury tax is $10,000. This luxury tax is paid at point of sale and is subject to HST.

For example, if a car costs $150,000, the tax is the lesser of 10% of the cost (10% x $150,000 = $15,000) or 20% of the price above $100,000 ([$150,000 – $100,000] x 20% = $10,000). 

Wishing you all a happy and healthy 2026. I look forward to serving your future accounting and tax planning needs. 

Dean Constand CPA